PUBLICATION

Steel Times International

AUTHORS

Alice Pascoletti, Nathan Allen

Mexico Steel 2014 STI Release

September 03, 2014

Mexico has been a key player in the global steel industry since the turn of the twentieth century, and the industry has in turn been a driver of Mexican economic development. However, competition from low-cost producers in China and India has put pressure on margins and forced producers to reign in costs in recent years. Moreover, the Mexican steel industry has suffered from uncompetitive energy costs, particularly when compared to the highly subsidized rates that steel mills in the United States pay for energy.

This appears set to change. In August 2014, Mexico’s Congress passed Mexican President Enrique Peña Nieto’s structural reforms, which will open up strategic segments of the economy, including the oil and gas sector, and help Mexico emerge from the economic doldrums. The opening of the oil and gas sector combined with the meteoric growth of automotive manufacturing should help provide a strong foundation for increased demand. Moreover, the benefits should cascade into the wider economy, as Mexican consumers gain higher levels of purchasing power.

Mexico’s steel industry is an exciting place to be, and, if local mills can capitalize on the country’s natural competitive advantages of close proximity to the United States and a highly skilled workforce, there is a very bright future ahead. The challenge now is to improve levels of technology and develop the level of expertise in the production of more sophisticated grades, and to the sector overall.

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